CHAPTER 14 TAKINGS CLAIMS IN THE UNITED STATES COURT OF FEDERAL CLAIMS

• Jurisdiction: United States

Natural Resources Development and the Administrative State: Navigating Federal Agency Regulation and Litigation
(Feb 2019)
CHAPTER 14
TAKINGS CLAIMS IN THE UNITED STATES COURT OF FEDERAL CLAIMS
Thomas P. McLish ¹
Akin Gump Strauss Hauer & Feld LLP
Washington, D.C.

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THOMAS P. MCLISH is a partner at Akin Gump Strauss Hauer & Feld LLP in Washington, DC. Mr. McLish represents clients in complex civil litigation, primarily focusing on cases involving the Federal government, including government contract disputes, allegations of fraud or false claims, and 5th Amendment "takings." He has represented owners, contractors and design engineers in complex lawsuits concerning the construction of large projects throughout the country, as well as health care companies, defense contractors and suppliers of commercial items and services. Mr. McLish litigates before Federal appellate and district courts, the Court of Federal Claims, federal boards of contract appeals, state courts and arbitration panels. He has handled disputes involving many U.S. agencies, including the Departments of Defense, Navy, Air Force, Army, the Army Corps of Engineers, Interior, Agriculture, NASA and the General Services Administration. From 1990 to 1995, Mr. McLish was a trial attorney with the U.S. Department of Justice Civil Division, Commercial Litigation Branch. In that position, he handled civil contract, fraud and federal labor law disputes, including major weapons system procurement, construction and Fifth Amendment "takings." From 1989 to 1990, he was a law clerk to the Honorable Robert P. Patterson Jr. of the U.S. District Court for the Southern District of New York.

I. Introduction

The United States Court of Federal Claims is an important source of jurisprudence relating to the Takings Clause contained in the Fifth Amendment to the United States Constitution. While that court hears only cases against the United States government, and not the myriad state and local governments whose activities generate takings claims, the rulings of the Court of Federal Claims and its appellate counterpart the Court of Appeals for the Federal Circuit have nationwide impact and influence.

This paper is a brief introduction to the Court of Federal Claims and its takings jurisprudence, identifies a number of recurring issues arising in takings cases at that court, and addresses some factors to consider when deciding whether to bring a claim for just compensation to the Court of Federal Claims or challenge the legality of a federal government action through an Administrative Procedure Act claim in a federal district court.

II. The United States Court of Federal Claims

When the United States was formed, it adopted the ancient English law concept of sovereign immunity.² Under this doctrine, the federal government is not liable for acts committed by its employees and officers, unless it consents to liability.³

Over the years, Congress has waived the government's sovereign immunity in certain respects, allowing citizens and others to seek judicial redress against the government directly. Among the earliest such waivers was the establishment of the United States Court of Claims in 1855, which Congress created to determine private claims against the United States Government. In 1887, the Tucker Act⁴ significantly expanded the jurisdiction of the Court of Claims. The Tucker Act remains on the books today, as amended through the years, while the Court of Claims evolved into two separate courts, the Court of Federal Claims and the Court of Appeals for the Federal Circuit.

The Tucker Act waives sovereign immunity to permit claims against the federal government "founded either upon the Constitution, or any Act of Congress or any regulation of

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an executive department, or upon any express or implied contract with the United States, or for liquidated damages not sounding in tort."⁵ Effectively, the Court has jurisdiction over all monetary claims against the government except tort,⁶ equitable, and admiralty claims. Of particular note here, claims for just compensation for the taking of private property founded upon the Fifth Amendment are included within the Court's jurisdiction.⁷ Indeed, the Tucker Act is the only grant of jurisdiction over claims over $10,000 against the United States for a violation of the Fifth Amendment's prohibition against a governmental taking of private property without just compensation.⁸ The Tucker Act, however, is merely "a jurisdictional statute; it does not create any substantive right enforceable against the United States for money damages. . . . [T]he Act merely confers jurisdiction upon [the court] whenever the substantive right exists."⁹

In 1982, the Federal Courts Improvement Act¹⁰ carved the Court of Claims into two pieces, a trial-level court called the United States Claims Court and an appellate court named the Court of Appeals for the Federal Circuit. In 1992, the Claims Court's name was changed to its current moniker, the Court of Federal Claims. Appeals from the Court of Federal Claims are heard by the Court of Appeals for the Federal Circuit, whose judgments are conclusive unless reviewed by the United States Supreme Court. Decisions of the Supreme Court, Federal Circuit, and the pre-1982 Court of Claims are controlling precedent on the Court of Federal Claims.

An important exception to the Court's jurisdiction is found in 28 U.S.C. § 1500, which provides that the Court of Federal Claims "shall not have jurisdiction of any claim for or in respect to which the plaintiff or his assignee has pending in any other court any suit or process against the United States . . . ."¹¹ The Supreme Court has explained that § 1500 "effects a significant jurisdictional limitation" and was designed to "save the Government from burdens of

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redundant litigation."¹² Where § 1500 applies, the Court of Federal Claims lacks subject matter jurisdiction and must dismiss the complaint.¹³

The Court of Federal Claims is an Article I--not Article III--court.¹⁴ As with Article III judges, judges at the Court of Federal Claims are appointed by the president with the advice and consent of the Senate.¹⁵ Unlike Article III judges, who receive life tenure subject to impeachment by Congress, Court of Federal Claims judges serve 15-year terms and are eligible for reappointment.¹⁶ Judges at the Court of Federal Claims may be removed by the Court of Appeals for the Federal Circuit for "incompetency, misconduct, neglect of duty, engaging in the practice of law, or physical or mental disability."¹⁷ Judges who have completed their statutory terms of office are authorized to continue to take cases as senior judges of the court. The Court of Federal Claims is currently assigned 16 active judges.¹⁸

The Court of Federal Claims hears only cases against the United States government. The federal government is the defendant in every case filed in that court. It has no jurisdiction to render judgments against state or local governments or private parties (except on counterclaims asserted by the United States).

There is no right to a jury trial in the Court of Federal Claims. All trials are bench trials presided over by one of the judges. The Court promulgates and follows its own rules of Civil Procedure, which are adapted from, and in most instances identical to, the Federal Rules of Civil Procedure.¹⁹ The Court will consider precedent under the Federal Rules of Civil Procedure where a gap exists in the case law governing its own rules.²⁰

According to the Court's most recent published statistics, from October 2016 to September 2017, 94 takings cases were filed at the Court of Federal Clams, six takings cases were reopened, and the court disposed of 68 takings cases.²¹ On October 1, 2016, there were 235 pending takings cases and on September 30, 2017, there were 264 pending takings cases in the Court of Federal Claims.²²

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III. The Fifth Amendment Takings Clause

A. The Inverse Condemnation Suit

The Fifth Amendment Takings Clause states that "private property [shall not] be taken for public use, without just compensation."²³ Essentially, the Clause creates a constitutional requirement that the government pay just compensation to those whose property it seizes.²⁴

The Takings Clause is based on the concept of eminent domain, the inherent power of the government to take private property. Until the 1870s, eminent domain was almost always invoked in the context of a "direct condemnation" suit by the government. In such actions, the government acknowledges it is using its eminent domain power and the property owner generally disputes the amount of compensation to which it is entitled.²⁵

The Supreme Court then began to recognize claims that government actions that interfere with private property may "take" property, even if not in the context of an explicit exercise of eminent domain. As later framed by the Supreme Court, under this understanding, the Takings Clause "was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole."²⁶ Thus the "inverse condemnation" suit was born: the property holder sues the government, alleging that a government act took its property, requiring payment of just compensation.²⁷ Unlike direct condemnation cases where the taking is explicit, a key and frequently contested issue in inverse condemnation cases is whether the government's action amounted to a "taking" of the property within the meaning of the Fifth Amendment.

Importantly, the remedy in an inverse condemnation suit against the government is not invalidation of the government act, but rather compensation for the value of the property taken. This is because the Takings Clause does not prohibit the government from taking private party, but rather requires the payment of just compensation when the government does so. As a practical matter...